ECB: enters wait-and-see mode
ECB rate cuts over for now, as monetary stimulus takes time to work through the economy Signs of economic improvement continue but conditions remain weak Details covered bond plan and new ECB staff growth and inflation projections will command attention Trichet to leave all options open; comments on the strength of the euro closely watched At their policy meeting last month, the ECB governing council announced both conventional and unconventional decisions. In line with expectations, the
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ECB preview: No rate cuts despite inflation at 0%
We expect the ECB to keep the refinancing rate unchanged at 1.0%. The governing council seems reluctant to go below 1% even with inflation at 0% and falling. We expect the policy rates to be kept unchanged for the next 12 months. ECB staff growth projections will be revised down to slightly below -4% for 2009, but might be revised slightly up for 2010. Inflation projections are likely to be almost unchanged, although a slight upward revision in 2010 is a possibility. The focus will be on the
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ECB preview: Wait and see from the ECB?
The ECB policy board meets on Thursday June 4th. At the May ECB policy meeting the ECB lowered interest rates to a historic low of 1% from 1.25%, announced a plan to buy 60 bln EUR in covered bonds and extended liquidity auctions from six to twelve months. The ECB also lowered its growth and inflation forecasts. The main focus at the June ECB meeting will be whether the ECB elects to expand its asset purchases and if the ECB has concluded that 1% will be the low level for ECB interest rates.
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